On January 2, 2015, Armenia became a member of the EAEU on the basis of the Treaty on the Eurasian Economic Union.

According to Article 72, paragraph 6.2 of the EAEU Treaty:

“6. Indirect taxes are not levied when importing into the territory of a Member State: 2) goods that are imported into the territory of a Member State by individuals not for the purpose of entrepreneurial activity.”

This means that VAT on goods brought to Armenia for personal purposes from Belarus, Kazakhstan, Kyrgyzstan and Russia, including cars, should not be charged. Meanwhile, the RA legislation states:

Article 3.1 paragraph 3-գ of the Law on “Value Added Tax”

“The obligation to pay VAT is borne by individuals who are not individual entrepreneurs or notaries, if they import goods into the territory of the Republic of Armenia, the import of which, according to the Law on Customs Regulation, is considered import for the purpose of carrying out entrepreneurial activities, or if they import cars into the territory of the Republic of Armenia “.

That is, according to the legislation, individuals driving cars from the EAEU still have to pay VAT to the budget of Armenia. If the law of the Republic of Armenia contradicts the international treaty, the Constitution comes into play:

Article 5, Part 3: “In case of contradictions between the norms of international treaties ratified by the Republic of Armenia and laws, the norms of international treaties shall apply.”

Thus, since the beginning of 2015, Armenia has illegally levied VAT on cars and other goods imported by individuals from the territory of the EAEU: 20 percent of the customs value.

Faced with this problem, having familiarized themselves with the complaints of citizens and the history of the issue, representatives of ARZ Holding and our not indifferent friends saw that the state is putting up fierce resistance to attempts by civil society to stop illegal fundraising. A situation has developed in which the corrupt government, which single-handedly decided on Armenia’s accession to the EAEU, does not want to give up sovereign taxation, which is in conflict with the regulations of this organization. Moreover, the interest of the oligarchic circles in maintaining this tax was obvious.

The Deputy Minister of Finance of Armenia, on the air of the Public Television, referring to this issue, stated verbatim:

“We have the right to this and we will keep this right. It’s one of our main sources of income.”

Karen Vardanyan, an expert and coordinator of the ARZ Holding and Union of Informed Citizens programs, prepared a legal framework to substantiate the illegality of levying this tax. With the participation of the head of ARZ Holding Philip Arzumanyan and IT specialist Edgar Hayrapetyan, the materials were handed over to Armenian media resources, representatives of the relevant authorities, and on February 18, 2016 to the office of the Eurasian Economic Commission in Moscow. The following response was received:

Events began to develop rapidly. The Prime Minister spoke about the conversation with the President during which they decided to repeal the VAT law.

At a government meeting, he announced the introduction of this issue at an extraordinary meeting of parliament. On March 17, the Parliament adopted a legislative package with amendments to the RA Law “On Value Added Tax”. These amendments came into force on March 31, 2016, and since that time citizens can import cars from the EAEU countries without paying VAT (once a year).